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Go-to-Market During a Downturn
Like it or not we are in uncertain times, destined for an economic downturn or full-on recession. Some predict it will happen in two waves while others see a “soft landing” in advance of the next bull market in the tech sector. Regardless, most technology companies are planning for a near-term downturn because, either way, it’s better to plan for something that doesn’t happen than to not be ready for the thing that does.
For our purposes, the term “go-to-market team” or “GTM Team” refers to marketing and sales-related operations and finance executives, managers, and staff.
No matter the economic or financial circumstances, my basic advice to startup CEOs and the executive leadership team (ELT) is to keep your foot on the gas. Considering the current cacophony of confusing signals, negative sentiments about inflation, interest rates, and markets, this advice is even more pertinent today.
Here are 12 initiatives to consider during the upcoming downturn or recession, so that you emerge in the strongest possible position to take advantage of the next bull market and improved economy.
In order of priority and importance:
Revisit the OpPlan. Reexamine hiring plans, forecasts, and budgets for 2022 and 2023. Think creatively and systemically. For example: Are there processes or work that can be outsourced or automated? Audit your systems. Are there more activities and technologies which can be bought off-the-shelf or moved into the cloud? What has to be changed in the budget in order to become more data- and AI-centric?
Embrace Your People. When markets go crazy, focus on the things you can control. Most importantly, take care of your people. Prioritize your top performers. They believe deeply and are fully invested in your mission. Manage out detractors and anyone who doesn’t aggressively embrace the goals or help solve simple, everyday problems. Even if it’s a small team, your best players and believers will help advance your cause. When scaling back, do so decisively, thoughtfully, and all at once. Include morale-boosting activities and listen closely to each member of the team.
Monitor Burnout. Help ELT, managers, and staff avoid burnout. Preparing for the new dawn after the downturn or recession can be stressful. Encourage the use of professional coaches and therapists. Make it a priority.
Spotlight Sales & Marketing Efficiency. Reexamine and possibly overhaul your data, metrics, and KPIs, especially CAC/LTV. Involve the whole GTM team. Downturns are a great opportunity to gain a deeper understanding of the market, customers, and sales cycle. Focus on growth metrics and direct spending toward marketing, ABM, and digital marketing. Publish your findings at the end of the process. Highlight near term changes required in data access, presentation, and technologies in order to get to the new promised land. This will end-up being a bonding experience for your entire GTM team.
Invest in Customer Retention. Increase your support for established customers. Spend extra time listening to “the Voice of the Customer.” This is especially the case for companies in competitive markets with low barriers to entry. Take care of your core business and you will be repaid when other customers threaten to reduce their purchases or shift allegiance to a competitor.
Target New Customers. Many advanced technology startups—especially with a B2B focus—lean on a customer base that consists largely of technology companies. This is the result of a 50-year tradition of tech companies being early adopters. While the initial monthly and quarterly revenues can be lumpy, a customer base centered on enterprise accounts is less volatile. Enterprise customers always want solutions that optimize their OpEx during a downturn. For example, open source had its greatest period of adoption during the recession of 2008-2011. Enterprise accounts can increase the average contract value (ACV) of a startup that is lean and mindful of direct sales and other costs. This increase can drive your valuation higher.
Improve Sales Enablement. Onboarding and training programs are the major sales enablement deliverable. Sales engineers, technical and account representatives, and managers are the primary audience for this training. A good example from the last major recession of the benefits of this initiative: An internal, five-episode podcast targeted at a large sales force developed by a large company explained strategy, and highlighted positioning points, competitive advantages, and tactics. The podcast series helped this SaaS company realize huge sales growth when it emerged from the downturn.
Reinvest in Product Marketing. Product marketing involves taking customer needs and aligning them, vis-à-vis company messaging and product positioning. This supports the goals of encouraging maximum wallet share and increased product use. Product marketing can involve product launches, promotion of new features, making products more sellable, or handling pricing, licensing or subscriptions, and/or terms and conditions of purchases. These can translate to increased uptake when good times return.
Introduce or Expand Product-led growth (PLG). Not all startups are able to fully implement PLG from inception. As a business strategy, PLG aligns user acquisition, expansion, conversion, and retention with the product itself. It creates company-wide alignment across teams—from engineering to sales and marketing—and with the customer directly, centered on the product as the largest source of sustainable, scalable business growth.
Build out or Expand Your Online Community. Online communities have many benefits, including cost reductions for technical and customer services, engendering brand and product evangelism, and increasing or retaining your customer base. Some say that the value of community is that it “works while you sleep.” This is especially true of communities that serve international and U.S. markets. Consider rereading this blog post here.
Prepare for Your Next Raise. A downturn is an ideal time to rethink your financing strategy and take a new approach to fundraising. After the downturn eases, many companies form a financing queue. Be prepared. Improve your story, especially if your startup institutes the initiatives described here. Document and enhance your story.
Prepare for Your Exit. A downturn can be the perfect opportunity to meet with the ELT and re-position your business and technology for a successful exit.
Downturns and recessions are great opportunities to question and rethink almost anything you do as a company. These initiatives are designed to help businesses survive, and even thrive, in this potentially hostile climate. When the clouds clear and the sun shines economically once again, these initiatives will bring about efficiencies and other conditions that will enhance your ability for a fast take-off, leading to growth and, ultimately, scale.